Margin-to-Tick Ratio
Initial margin divided by tick value — the number of adverse ticks required to wipe out all posted margin on one contract.
Formula
Margin-to-Tick Ratio = Initial Margin / Tick Value
The margin-to-tick ratio expresses how many ticks of adverse movement a futures position can absorb before the initial margin is fully exhausted. It is a quick proxy for the leverage embedded in a contract.
A lower ratio means higher leverage — the position is wiped out after fewer adverse ticks. This ratio changes whenever the exchange adjusts margin requirements (which happens frequently around volatile events) or when the underlying price moves significantly (changing notional value).
Example
ES initial margin = $15,840. ES tick value = $12.50. Ratio = 15,840 / 12.50 = 1,267 ticks = 317 points. Seems large — but with day-trading margin of $500, that ratio drops to 500 / 12.50 = 40 ticks = 10 ES points before all margin is gone.
Related Terms
Day-Trading Margin
A reduced intraday margin rate offered by retail brokers for futures positions opened and closed within the same session.
IntermediateInitial Margin
The minimum deposit required to open one futures contract, set by the exchange clearing house (CME, CBOT, NYMEX).
BeginnerLiquidation
The forced closure of a futures position by the broker when account equity falls below margin requirements.
IntermediateTick Value
The dollar P&L impact of one minimum price move in a futures contract. Tick Size × Contract Multiplier.
Beginner